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My strategy is as follows:
1) Short-term trade the nasdaq futures short on trend line breaks
accompanied by momentum crossovers of the zero line, with tight stops (high
of bar just before trend line break).
2) Work to improve my long term trading systems to be as profitable as
possible on the short side. Would be willing to exchange research on this
system on a one on one basis.
3) Look for a upside break of $350 on gold futures (which is major longterm
resistance), a pullback, then look to go long.
4) Sold ALL stocks and majority of real estate. Liquidated all IRAS,
Keogh, and SEP accounts.
5) Recommend same to all clients we manage money for, with exceptions based
on their profile, place them in high grade corporate bonds, municipal
bonds, and money market funds.
6) Look to sell the rallies in the treasury bond market, which will likely
rally when the market tanks, then will tank itself as foreignors unload the
TRILLIONS they hold in bonds and the US government sells even more bonds in
an effort to generate income for stimulus programs and to pay the rising
interest on the massive debt.
7) Short sell the US dollar index, the US dollar will be worth the confetti
that it is. When the confidence is lost in the officials, when it is
proven that they really can't control the markets long-term, the dollar
will fall.
8) Read all I can on the 1920-1930's. Many books on the market and
a good free publication is at:
http://www.pei-intl.com/Research/GBM/GBM-MAST.HTM
9) Look to pick-up some foreclosed real estate, and property (cars, etc)
and the many auctions, desperation and going-out-of business sales that are
coming.
Based on past market history, the market meltdown will happen in stages.
Phase 1) Sharp plunge (20-25%), sharp pullback of 38 to 62% of initial drop
(depending on the level of bs that the government dishes out and how
gullible the masses are). 2) a second sharp plunge (20%) followed by a
lackluster/cautious trend upward which will be met by selling at all prior
support levels. 3) a long slow bleed lower, with intermittent large one day
volitility swings. The 1929 crash took until July 1932 to hit rock bottom
at 40 (with market losing 90% of its value.)
The Fed (the ones whose irresponsible actions helped us get into this mess)
will likely do the following:
1) Cut interest rates to zero, a quarter or half at a time. It will make
no difference how low the rates are, classic example Japan, where the
ratres are .15% and still few takers (and few that qualify for the loans.)
2) Print more money to add liquidity. The dollar will crumble.
3) Cut taxes for poorest citizens, and raise taxes on others. Local
governments will raise property taxes on homes to make up for lost
corporate taxes after thousands go out of business. The massive debt that
has been amassed may (according to the following web site) result in tax
rates approaching 60%. This would likely result in another Boston tea
party and revolution if it were forced down the throats of the citizenry.
http://www.concordcoalition.org/facing_facts/ff_fax40.html
4) Fed officials will band together the large investment houses, as they
did in 1929 and to save LTCM just last year, to parade out their
"so-called" experts to tell us that they are buying and we should too.
5) The government will trade the markets (manipulate them) buying large
blocks of stock (as they did in Hong Kong) to try to deter short selling.
Meanwhile the public will suffer as the layoffs/foreclosures/bancruptcies
will mount. Many millionaires were made in the 30's, many fortunes were
also lost, and countless lives ruined. An indepth understanding of past
history can only help.
---------
At 10:46 AM 10/8/99 +0100, Gwenael Gautier wrote:
>OK OK , any scenario may have merits. But they are only scenarios, and
this one
>has been around for ten years now. Eventually it could happen yes, but
what is
>worse go short at DJ 5000 and see 10000 or go long at 10000 and see 5000?
>
>In essence, what is it you advocate?
>- Please be specific: What is to be traded?
>- Go long, flat, or go short?
>- If so, at what level, with which stop?
>- And once in the trade what's the exit plan?
>
>Gwenn
>
>PS. I usually buy my umbrella when it rains yes, not in the summer... :-))
>
>
>
>
>| -----Ursprungliche Nachricht-----
>| Von: James Taylor [SMTP:jptaylor@xxxxxxxxxxxxxxx]
>| Gesendet am: Friday, October 08, 1999 7:52 AM
>| An: BruceB; realtraders@xxxxxxxxxxxx
>| Betreff: Re: Spinning Financial Illusions - The Story of Bubblenomics
>|
>| Did I say that you should have gone short when Fleck did ?
>|
>| Fleck is not a technical trader. He is well informed of the fundamentals.
>| The fact is, the upward bias in the market makes short selling a
>| challenging venture. The most profitable period for shorts were 1973-74,
>| and 1930s.
>|
>| A good project and challenge for this board is to develop a trading system
>| that is profitable on the short side, as well as long. A good test of the
>| system is to run it from the 1920s thru present day for the Dow, to allow
>| the most data points, and challenge of a market which has been going up the
>| majority of that period.
>|
>| The fact is, market breadth is horrible and worsening, fewer and fewer
>| stocks are going up, earnings are punk at best, and valuations are insane.
>| When will the bubble finally burst ? I agree with Fleck's theory, the
>| techs must breakdown first. Since that is the area of the most froth
>| (Nasdaq at over 120 times earnings).
>|
>| Do you wait for the rain to start before you buy your umbrella ?
>| Can the bubble get larger before it blows ? Sure, but I would consider
>| risk/reward before blindly going long, hoping the long line of greater
>| fools keeps coming.
>|
>| Do yourself a favor and read all you can on this tragety waiting to happen.
>| http://www.stern.nyu.edu/%7Enroubini/asia/AsiaHomepage.html
>|
>| and for god's sake, prepare yourself.
>| http://www.advsoftware.com/summary.htm
>|
>| ---------
>|
>| At 08:40 AM 10/7/99 -0400, BruceB wrote:
>| >James, just out of curiosity, how much would my account be down right
now if
>| >I had gone short when Fleckenstein first became bearish? How much does
the
>| >market have to fall before I even get back to break-even on his wonderful
>| >advice?
>| >
>| >Bruce
>| >
>| >
>| >
|